Fear Index Update June 2012 - James TurkSubmitted by Charleston Voice on Fri, 06/22/2012 - 20:32
Posted by Charleston Voice, 06.22.12
Dynamite The constant talk about gold’s lack of yield, which in many analysts’ opinion disqualifies it as a desirable asset, ignores the very important and extremely valuable function that gold performs as an independent and reliable store of value.
Savings and liquidity have value, especially in times of uncertainty, and so does insurance. Gold is money and it is also insurance against the failure of fiat currency. How much is it worth to protect your hard earned wealth from the arbitrary decisions and regime uncertainty that permeates the world of monetary policy?
The simple fact is that people around the world – particularly in Asia – are willing, as many have been for generations, to save in gold. They know that whatever happens to political systems, currencies and nations, their gold savings will probably outlast them. They do not need to be encouraged, persuaded or coerced into owning gold. They choose to use it as a store of value freely.
Some economists have argued that the supply of gold can change as more gold is mined and discovered. Projects to mine asteroids or the bottom of the sea are cited as dangers to the stability of the world gold stock. This argument is perhaps valid at some level, but let us put things into the proper perspective: the Federal Reserve can create a trillion dollars at the touch of a button; but to mine gold in the asteroid belt would require a space programme of epic proportions and is beyond our present technology. The supply and demand forces at work in the world of “gold money” are light years slower than those in the fiat-currency world of central banks. This simple reality is why some people, namely those in control of the printing press, resist so fiercely the idea of gold as money and fought so long to banish it.
Read more:Fear Index Update June 2012 - James Turk